Efficient liquidity planning: free template and tips
Efficient liquidity planning is crucial for the success of your business. It allows you to better manage your financial resources, identify bottlenecks, and prepare for future financial challenges. But how can you implement this planning effectively without consuming vast amounts of time and resources? Below, we explain what matters in liquidity planning. A template will also make it easier for you to take the first steps.
Definition of liquidity planning:
Liquidity planning is a process in which businesses proactively manage their financial resources to ensure they always have sufficient funds to meet their ongoing obligations. This involves forecasting income and expenses over a certain period to better estimate the company's financial position.
Example of liquidity planning:
Consider the case of a retailer undertaking liquidity planning for the next quarter. This retailer expects to generate 50,000 euros in revenue. Additionally, they know their monthly expenses amount to 40,000 euros, including wages, rent, supplier costs, and other running costs. Based on this information, the retailer can see that they generate 10,000 euros each month. He also has enough liquidity to cover his expenses and can think about future investments.
Template for liquidity planning:
Liquidity planning can be done in a simple table or a spreadsheet, which is why we offer a free template for you, designed to be intuitive and easy to use.
Tips for successful liquidity planning:
- Regularly control your finances: Regularly check your financial actions, expenses, and cash flows to maintain an accurate overview of your financial situation and identify bottlenecks early.
- Use realistic estimates: Ensure that your financial forecasts and estimates are based on realistic assumptions and data to minimise risk and generate achievable goals.
- Prepare for unforeseen events: Build a buffer in your liquidity planning for unexpected expenses or revenue shortfalls to protect your liquidity.
How can liquidity planning help small and medium-sized enterprises (SMEs) with financial challenges?
Problem: Small and medium-sized businesses often face financial challenges, such as unexpected expenses, fluctuating income, or lack of liquidity, which can lead to the company failing to meet its obligations.
Solution: An effective solution for these challenges is liquidity planning for SMEs. By forecasting income and expenses for a certain period, businesses can better assess their financial position, allowing them to manage their finances more effectively and ensure they have sufficient funds to cover their obligations.
Benefits of good liquidity planning for SMEs:
- Better informed about financial resources: Through liquidity planning, SMEs gain a better overview of their financial resources and can more realistically assess their financial situation.
- Proactive financial management: By regularly monitoring income and expenses, SMEs can take proactive steps to improve their financial position.
- Reduction of financial risks: By predicting income and expenses, SMEs can identify financial risks and take appropriate measures to minimise them.
- Support in decision-making: Liquidity planning enables SMEs to make informed decisions and manage their finances more effectively.
Liquidity planning offers small and medium-sized businesses an effective solution to their financial challenges.
To learn more about optimal liquidity planning, Tidely offers interactive and informative webinars for all interested parties.
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